Orange Middle East and Africa CEO Jerome Henique (pictured) has left the door open for an eventual entry into the Ethiopian market, despite recently dropping negotiations with the government to acquire a stake in state-incumbent Ethio Telecom last year.
Speaking to Developing Telecoms at Mobile World Congress Barcelona, Henique detailed that “we need control which means more than 50%”, to launch a business venture in a new market.
“Unfortunately, the government was considering only a partial privatisation of Ethio Telecom of 45% and we didn’t find a way to give us the security that we will control the operation, to enable us to deploy our operating model in the country,” said Henique.
“We hope it will resume one day, we are ready to discuss with the government about Ethio Telecom when they change their mind on the way they want to open up capital in Ethio Telecom – it’s a great operation with great potential for Ethiopia.”
Ethiopia is still seen as one of the last greenfield opportunities in the telecoms industry, with a population burgeoning over 100 million people and a telecoms sector that only opened up to international investment in the last few years.
Orange’s pan-African rival Vodacom entered the market in October 2022, after securing the country’s second operating licence to create its unit Safaricom Ethiopia.
Henique noted the Ethiopian government was in discussion with multiple parties, but it did not come to an agreement with any investors.
Regulation and taxation confusion, growth hurdle
For now, Henique is focusing on growth in Orange’s current footprint which comes with its own challenges.
Henique highlighted taxation in Africa as the main hurdle to Orange’s growth ambitions on the continent, arguing that “sometimes there is a confusion between regulation and taxation” from governments.
“We are suffering from high taxation in most African countries in the form of taxes up to 30% of our revenues in some markets, which is jeopardising our ability to invest” said Henique.
He added that Africa had been a bright spot on the group’s overall financial results for the past few years, and that it can expand further with more cash.
“We still have to put in a lot of capex for our network modernisation and deployment. But unfortunately, our results are penalised by very high taxation in comparison with other sectors, such as mining for instance. Telecom is really targeted by some governments and regulators for taxes despite its key contribution to countries economic development.”
In 2019, Orange sold its unit in Niger to minority holder Zamani Com due to market conditions. Henique did not detail exactly which markets are currently proving to be pain points for investment in Africa.
The chief executive pointed to recent results to showcase the group’s successes in Africa. Orange MEA saw a growth rate of 11.4% year-on-year to €7.2bn in revenue for 2023, the best rate of growth among the Orange Group.
Growth ahead, 5G rollout
Despite the massive challenge of high taxation, Henique expects the 17 units under his control to continue being the “growth engines of the group”, through four main avenues.
The first is mobile data, as only 50% of MEA subscribers have tapped into data services, leaving plenty of room for growth. Henique noted 40% of mobile data users are on 4G despite coverage standing at 85%.
Orange is also aiming to ramp up 5G deployment having launched in Jordan and Botswana last year. The operator acquired a 5G licence in Senegal last year, which will be where the group launches the technology next.
Henique expressed confidence that deals will be signed for licences in the Ivory Coast, Morocco and Tunisia for launches in 2024.
The group invested over €1 billion into 4G and 5G deployments in recent years and this increased to €1.2 billion in 2022, and then €1.25 billion in 2023.
“We are increasing average capex for the network every year as we know that we still have to invest in Africa much more than in Europe in comparison, because the technology transition towards 5G and fibre is in front of us not behind us.”
The second route for growth is deployment of fixed wireless access broadband which is provided to the main cities across Africa and the Middle East.
The third will be through mobile money platform Orange Money, which currently has around 34 million active customers per month. Henique noted the segment saw 25.8% growth in 2023.
Last, will be growth in B2B as economies across the MEA formalise, and demand for broadband and mobile surges. “These four growth engines are already showing very strong overall performance for Orange,” said Henique.
